JC Penney bets on Oracle, RFID checkouts

Summary:The benefits of going with RFID checkouts are customer satisfaction and real-time inventory tracking. The risk is that the tags won't read and customers walk out with merchandise.

Part of JC Penney CEO Ron Johnson's master plan to transform the retailer will depend on a three-year Oracle implementation and a heavy dose of radio frequency identification (RFID) tags.

Speaking about JC Penney's transformation on Wednesday, Johnson detailed the retailer's technology overhaul. Today, JC Penney has nearly 500 systems and 95 percent of its budget goes to updating and maintaining them.

The plan for JC Penney is to standardize on Oracle, which has touted the retailer as a reference customer. Johnson, who used to lead Apple's retail operations, said:

We're going to be rolling out full Oracle retail and that's going to take three years. It starts next year with Merchandise Planning and those kind of information systems but then we're going to connect all that with our point of sale. It's going to be hard.

Add it up and JC Penney has a store redesign, new IT systems and revamped checkout procedures on deck.

Related:  JC Penney CEO Ron Johnson on Steve Jobs: Transformation isn't easy

According to Oracle, JC Penney will implement Oracle Retail Merchandising Operations Management, Oracle Retail Merchandise Planning and Optimization, Oracle Retail Supply Chain Planning and Execution, and Oracle Retail Stores. JC Penney already has Oracle databases, middleware and various ERP and business intelligence tools.

The real interesting development for JC Penney and its customers will come with a revamped checkout process. Johnson's plan is to allow for RFID checkouts.

He said:

RFID I think will be the easy part because we're actually very experienced at RFID. Penney has been one of the leaders in RFID for the past four or five years. We have 40% of our tickets on RFID now. We've been using RFID to help replenish a lot of basic categories for years and we've seen the operational benefits from that. When we move to the customer and we let customers start to check out with RFID and that's where we've got of be a little careful. You've got to be careful from shortage and shrinkage. We're going to get there. It's the right thing to do.

The benefits of going with RFID checkouts are customer satisfaction and real-time inventory tracking. The risk is that the tags won't read and customers walk out with merchandise.

"We haven't figured out exactly how that flow will work. We're working through it. We'll be ready to go next spring with both personal checkout and checkout in pockets," said Johnson.

Cash registers will remain in JC Penney stores next year, but they will be removed so cashiers are untethered later. He added:

We will let everyone check out with their iPhone or iPod starting in February. So every employee is going to have an iPod in their pocket which they can use to check out a customer next spring. But we'll also have the redundancy of the cash. We think that will make us more efficient as we watch the percent go to check out anywhere, anytime and anyone.

JC Penney will phase in the new checkout systems because there's an adjustment period.

"When we did this at Apple, we went through a period. That was hard. We've got to get through that," said Johnson.

Topics: Enterprise Software, Oracle


Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

zdnet_core.socialButton.googleLabel Contact Disclosure

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Related Stories

The best of ZDNet, delivered

You have been successfully signed up. To sign up for more newsletters or to manage your account, visit the Newsletter Subscription Center.
Subscription failed.